Improving customer loyalty is emerging as a top marketing goal in 2018. Research from The Point of Loyalty and First Point Research and Consulting revealed that marketers are now prioritizing customer loyalty over new customer acquisition. A separate study from 3Cinteractive found that 64% of brands plan on boosting their loyalty program membership this year.
But realizing that a majority of loyalty programs are proving to be ineffective, many business leaders are rethinking their approach to delighting and retaining their current customers. In an era when customer expectations continue to go up, the old way of offering gifts and rewards for transactions is no longer sufficient to entice customers to come back.
If you’re looking for new ways to improve customer loyalty, here are three fresh perspectives to consider.
Set up for frequency rather than transaction value
Direct-to-consumer brands are tweaking their loyalty programs to make them more relevant to customers. Men’s underwear and basics brand Mack Weldon, for instance, moved from a volume-based pricing model to one that rewards frequent shopping.
“The more frequently a customer purchases, the more engaged they are in the brand, and the more likely they are to stick around,” Brian Berger, founder of Mack Weldon, told Glossy about the move.
Rather than offering discounts based on how many items shoppers have in their carts, the company tweaked its loyalty program to offer two tiers: a lower tier that grants shoppers with free shipping, and an upper tier that provides a 20% discount on all orders, along with other surprise gifts and perks. “Customers like the value proposition, but this drives the business in the long-term, as well,” Berger said about the new loyalty model.
"Loyalty programs are a misnomer; in some ways, they’re disloyalty programs."
While DTC companies like Mack Weldon are finding success in newer models of loyalty programs, some experts caution that offering discounts could damage a brand.
"Loyalty programs are a misnomer; in some ways, they’re disloyalty programs," Richard Kestenbaum, partner at the private investment firm Triangle Capital, told Glossy. “They’re not asking a customer to buy because the product is great, they’re asking them to buy because the price is great. It becomes a race to compete for the lowest price, and as a brand, that’s not a race you want to be in.”
Break down data silos
In many organizations today, different teams manage customer relationships—but they do so independent of each other. According to Vision Critical CMO Tyler Douglas, those silos need to come down if you want to win with today’s customers.
“While it’s vital to have someone take the lead on implementing customer-focused changes, building strong customer relationships that inspire loyalty requires a company-wide commitment,” Douglas wrote in a recent piece for the Salesforce Canada blog. “Companies that keep customer relationship ownership in silos are limiting the business benefits of those relationships.”
Customer knowledge needs to be shared across the enterprise, according to Douglas, and each department needs access to one, unified view of the same customer.
Embrace experiential retailing
Brick-and-mortar stores remain an important channel in retail. So much so that many companies are investing more resources in the in-store experience. A PSFK report, Future of Retail 2018, found that 55% of retail executives plan to spend a chunk of their marketing budget towards the in-person shopping experience.
One example, according to Vengo co-founder and CEO Brian Shimmerlik, comes from Saks. The company recently opened The Wellery, its flagship store in New York City. "Saks looked at using their space in a different way to forge customer relationships around a topic that matters to them: wellness," explained Shimmerlik. As a result, the store offers therapy rooms, guided meditation and golf simulators—compelling experiences that center around wellness. “While athleisure was available throughout, the strategy was focused on building strong emotional connections to the space in order to make Saks a destination for wellness and yoga pants.”
Immersive experiences—such as the one that Saks employed in its flagship store—can build customer loyalty if they offer something customers can’t get online, according to Shimmerlik.
True loyalty is about customer relationships
The one common theme in the examples above is that they all revolve around improving customer relationships. Whether you’re tweaking your loyalty programs to encourage repeat visits or aiming to improve aspects of the experience, it’s crucial to demonstrate to your customers that you’ve understood their needs and wants.